Groupon Therapy

Starting with a two-for-one pizza deal just three years ago, Groupon has snowballed, becoming a multi-national business with an I.P.O. on the horizon that could value the company at an estimated $20 billion. But is the Web site’s idiosyncratic C.E.O., Andrew Mason—an accordion-playing, ever paranoid prankster-ready to move Groupon forward and fight off a horde of copycats?

THE CAT AS A HAT Andrew Mason, founder and C.E.O. of Groupon, once spread a rumor in his office that he owned 20 cats.

Michael Bloomberg was due to arrive any minute at the downtown-Chicago headquarters of the daily-deals Web site Groupon. Andrew Mason, the 30-year-old founder and chief executive of what Forbes deemed “the fastest growing company ever,” was standing in the company’s glass-paneled cafeteria on the sixth floor, chatting with employees and popping blueberries into his mouth. Next to him was Spice, a spotted pony with a poofy Groupon-green taffeta bow wrapped around his neck. Spice was a gift for Mayor Bloomberg.

Mason, whose six-foot frame belies his pixie-ish personality, was wearing his usual jeans and long-sleeved button-down. His mop of brown hair was messy, his face stubbly. He looked like he was going to a baseball game, not meeting the mayor of New York.

“Spank the pony!” yelled one employee. Laughter erupted.

“No gawking, please! I thought everyone got an e-mail saying not to gawk at the pony,” Mason boomed. “Can we get everyone out of here? All humans out. Don’t worry about the shit.”

The onlookers dutifully scattered.

An employee walked up to Mason and politely sought guidance on how to present the pony to the mayor. “I really haven’t figured out the narrative yet,” he said.

He had originally planned to give the mayor a puppy, but decided that a pony would be even more memorable. “I mean, it’s such a heavy thing to gift someone,” he said, laughing. “I thought it would be funny to give it to somebody as busy as the mayor.”

He shrugged his shoulders. “Really, I don’t know how it ended up this way. Sometimes I put an idea out there. It’s like telephone, the game—it comes out the other side a pony in the cafeteria.”

Less than 20 minutes later I walked by the cafeteria and Spice was gone.

Moments before Bloomberg arrived, one of Mason’s employees had Googled “horse” and “Mayor Bloomberg.” He discovered that the mayor’s daughter had recently been in a riding accident.

Mason panicked. Worried that Spice would offend the mayor, he ordered somebody to hide the pony. Spice spent the duration of the mayor’s visit in a freight elevator.

“Judgment,” Mason said, winking and pointing to his head.

Two years ago, Mason wouldn’t have thought twice about giving the pony to Bloomberg—awkward moments be damned. He’s the type of guy who comes up with wild ideas that often have no beginning or end, and then lets them rip. Finding out where—or if—they land is part of the fun.

Sometimes Mason gets lucky and finds that he masterminded a killer joke. Other times he ends up with his foot in his mouth. Earlier this year, he offended viewers around the globe when Groupon ran a series of Super Bowl television ads poking fun at deforestation, whales, and the Free Tibet movement. Mason originally defended the commercials, saying they were intended to raise awareness. But, after a barrage of criticism, he apologized and ended Groupon’s relationship with the agency that had executed the ads. Mason now admits that he “flew too close to the sun.”

“If you don’t have those moments where you go too far, then you’re probably not going far enough,” he told a roomful of employees recently.

The deal-of-the-day start-up that Mason launched less than three years ago has certainly gone far. It is now a multi-national corporation with 83 million subscribers worldwide and more than 7,000 employees.

In early June, Groupon made a splash when it filed for its highly anticipated initial public offering, which aims to raise at least $750 million. Once shares start trading, the company could be worth around $20 billion, according to projections. Mason, who controls 7.7 percent of the company, will almost certainly become a billionaire overnight.

Groupon’s steps toward its I.P.O. came just weeks after professional-networking site LinkedIn hit the public markets, sending its shares soaring by more than 100 percent on the first day of trading and valuing the company at around $9 billion (its shares have since trended down). With other tech elite lined up to go public, possibly including Facebook and gaming company Zynga, observers question whether all the excitement and frothy valuations might be evidence of another tech bubble.

Some are calling Mason the next Mark Zuckerberg. “It’s kind of comparing a ruby and a diamond. They’re both extraordinary,” says Reid Hoffman, co-founder of LinkedIn and a partner at the venture-capital firm Greylock Partners, an investor in Groupon.

And yet, Mason still hasn’t fully come to grips with the fact that he’s a C.E.O.

“I find myself using the word ‘executives’ now,” he says, laughing, as though it were a preposterous notion.

Mason often lampoons corporate culture, trying to distance himself from it. At a tech conference last year, he slicked back his hair and smeared bronzer conspicuously on his face, parodying what a Groupon colleague referred to as “an entrepreneurial schmuck”; the year before, in a bid to win a Chicago Innovation Award, he distributed a fake attack ad accusing rival contestant Abbott Laboratories of harboring a secret “illegal cloning farm working on animal-hybrid soldiers.” Mocking corporate culture in an exaggerated way is part of Mason’s shtick, but it’s also a calculated—some say risky—bet to ensure that his company doesn’t become just any old Fortune 500.

Mason says he still tries to make his company feel like a start-up. Every two weeks, he sits down with new employees in a church near Groupon’s headquarters (there’s no longer room in the offices) in order to give them an overview of the company and a chance to ask him questions. He told a group of new employees at one recent session, “As we get bigger, instead of being like most companies, conforming and becoming more normal, we want to become weirder.” To outsiders coming in, the culture at Groupon can be jarring. After Mason’s orientation speech, I overheard one new employee say to another, “It seemed like a big inside joke, the whole thing.”

One day in May, dozens of Groupon job applicants rode an elevator to the 24th floor of Groupon’s satellite Chicago office and gathered in a spacious conference room overlooking Lake Michigan.

A young Groupon recruiter named Keith Griffith proceeded to give an hour-long presentation on how to craft Groupon’s signature write-ups, which are sent to subscribers to tout the daily deal. They’re notoriously bizarre. “It’s like absurdist poetry,” Griffith said.

Here’s a recent write-up:

Studies indicate that smell is the greatest trigger for intense memories, causing people to recollect preschool with a whiff of Play-Doh or cotillion with the metallic scent of fear. Stimulate your sniffer with today’s Groupon: for $50, you get an 80-minute aromatherapy massage at Heavenly Massage (a $100 value).

Griffith explained to the packed room that humor is key to the write-up. Copywriters must master the voice of “the Groupon narrator.” “Nobody here is like the Groupon narrator,” Griffith said. “That’s because that person is crazy—imagine an unhinged professor.” The most important rule of all: “Never admit that you’re making a joke. Never wink at the reader.”

Groupon takes its humor rules seriously. Take the example of a Groupon write-up that mentioned that hummingbirds come from cocoons. A reader wrote to Groupon customer service to point out that hummingbirds don’t actually come from cocoons. A Groupon rep wrote back: “Thanks for your email and I’m sorry for any confusion. Hummingbirds do come from cocoons.” The frustrated reader reached out to Ross Hawkins, executive director of the Hummingbird Society, who wrote an e-mail to the reader and to Groupon saying, “Hummingbirds are birds, not insects. They come from eggs.”

The Groupon rep in turn produced a Photoshopped National Geographic cover showing a hummingbird emerging from a cocoon. The e-mails continued escalating until Hawkins bowed out in frustration. Groupon’s final message to the customer was this: “We appreciate your feedback, but we will have to agree to disagree.”

Groupon still has the hummingbird misinformation on its Web site. “We’ll keep going forever,” said Griffith.

Groupon write-ups are essentially window dressing for the same coupons that the thrifty have clipped for decades. But coupons are dowdy. Groupons are cool. That’s the Groupon mantra.

At its most basic level, Groupon is a local advertising company for the Digital Age. Over the years, small businesses have had a notoriously tough time acquiring new customers, relying primarily on ads in newspapers and Yellow Pages, on the radio, and online. The trouble is they’re never quite sure if these placements are working.

Mason loves explaining how he exploded this age-old model: “So Groupon comes along and for the first time merchants are able to get customers in the door without the risk of putting money up front, and for a much lower cost of customer acquisition than anything else,” he told me.

While e-commerce sites like Amazon and eBay have thrived in the Internet age, it turns out that people still spend the vast majority of their disposable income on stuff that can’t be shipped in boxes. Every year Americans spend more than $300 billion on eating out, $380 billion on recreational activities, and another $100 billion on personal-care services, according to data from the U.S. Department of Commerce.

Mason’s eyes light up when he talks about the numbers. “Local commerce reflects a humongous space, and we’ve only just gotten started. It’s a trillion dollars in the U.S., and I’ve heard $14 trillion globally. That’s the space we’re playing in.”

Groupon deals can be irresistible to customers. The merchant typically agrees to discount a product or service by 50 to 90 percent. Groupon then sells the coupons via its e-mail distribution list. Usually a minimum number of people have to buy the offer before the deal “tips” and becomes redeemable. Groupon and the merchant then split the revenue from the deal 50–50. They both keep the money even if the customer never redeems the voucher. An estimated 20 percent of Groupons don’t get used, which amounts to free revenue for local merchants.

Recently, in the Chicago area, Groupon offered a deal to its subscribers for 92 percent off personal-fitness classes at a gym. For $29, customers could get 20 passes to the gym and one personal-training session, a deal normally worth $350. The tipping point for this offer, set by Groupon’s customer-service reps in consultation with the gym, was 100. Once that many customers had committed to the deal, their credit cards were charged, and their memberships were redeemable. More than 1,000 people bought the deal and had a window of six months to redeem it.

Groupon can be used for almost any type of business. Mason likes to say it’s great for the “hidden gems”—businesses that excel in their craft but aren’t well known. Common Groupon merchants include restaurants, yoga studios, dentists, spas, photography studios, and clothing boutiques. While most of the deals are local, Groupon has recently been partnering with big national retailers, including the Gap and Quiznos.

The model isn’t perfect. Some businesses have complained that the deals generate too much traffic and lead to a bad customer experience. Others say that new Groupon buyers are just one-off deal seekers who don’t become repeat customers. Another complaint is that Groupon’s cut of the deal is too large, making it hard for the merchant to see a profit.

Mason says that Groupon’s merchants generally don’t make money immediately when they run a Groupon. The real return on investment happens, he says, over the months a Groupon is active and as new customers become repeat customers. (A recent study at Rice University found that about 4 percent of Groupon users returned as full-paying customers after two weeks.)

Mason insists, though, that he’s not an entrepreneur. “I don’t tend to think of the world in those ways,” he says. Still, “looking back, someone could reasonably think that I’d end up here,” he says.

Mason grew up in an upper-middle-class neighborhood outside Pittsburgh. His parents separated when he was seven years old, and Mason and his sister, Jessica, lived mostly at their mother’s house.

“I think I was probably that kid in the neighborhood who you could expect once or twice a year to be knocking on your door trying to sell you something stupid,” Mason says.

As a teenager Mason launched a bagel-delivery venture—buying bagels at a 40 percent discount and charging his customers full price, plus a delivery fee. Every Saturday morning he’d pick up the bagels, load them into a red Radio Flyer wagon, and make his deliveries.

In 1999, Mason moved to Chicago’s North Shore to attend Northwestern University, where he studied music. (Mason, a pianist from a young age, says that he wanted to pursue his dream of becoming a rock star.) In his downtime, he taught himself computer programming.

While at Northwestern he interned at a recording studio run by Steve Albini, a producer who has worked with the Pixies and Nirvana. Many of Mason’s ideas, Albini says, “seemed sort of preposterous on first blush, [but] he can very quickly abandon a bad idea and pick up a good idea without being interrupted by inertia. He is one of the most nimble thinkers I’ve ever run into.”

Mason graduated from college in 2003 without a clear plan. He took a job as a software developer at InnerWorkings, where he met Eric Lefkofsky, a prominent Chicago investor and businessman. Lefkofsky immediately identified Mason as a preternaturally hard worker. “He was here morning, noon, and night,” he recalls.

In 2006, Mason landed a scholarship at the University of Chicago’s school of public policy to develop an Internet site he had created that mapped out policy arguments on issues ranging from the war in Iraq to Social Security reform.

In graduate school he began working on a new fund-raising and social-action Web site based on the concept of the “tipping point.” He got the idea after he became annoyed at having to pay a $150 early-termination fee to his cell-phone provider: “I was like, This is bullshit. How is this allowed to happen? And it seemed like everybody felt the same way.”

The idea caught the eye of Lefkofsky, Mason’s former boss at InnerWorkings. “There was almost nothing else like it on the Web,” Lefkofsky says. He offered Mason $1 million to develop the site. Mason took the money and dropped out of graduate school. He then developed what became known as the Point, a Web site aimed at converting a shared problem into action. Its slogan was “Make something happen. More than a petition. Better than a fundraiser.”

“I’d always thought with the Point that I’m going for the big win and changing the world,” Mason says. Many of his original projects on the site were rooted in social activism: forcing Kentucky Fried Chicken to adopt more stringent animal-welfare standards, or coercing PepsiCo to package its Aquafina water in biodegradable plastic bottles. But the socially conscious efforts didn’t attract enough subscribers, and they fizzled. By October 2008, the Point was on the verge of being shut down.

“Eric [Lefkofsky] was pressuring me to think radically differently and figure out a way to monetize the site,” Mason recalls.

Mason had noticed that the most popular campaigns on the Point involved group buying. He decided to set up a sub-business dedicated to commerce rather than ideals. At first, Mason says, he thought the new business would just be a way to pay the bills. His friend and co-worker Aaron With came up with the name Groupon—a fusion of the words “group” and “coupon.”

Mason credits Lefkofsky for the shift in his focus: “He just created a splinter for me. It was that agitation that he created that ultimately led to the formation of Groupon.” (With a 21.6 percent stake in Groupon, Lefkofsky is the single biggest investor in the company; when it goes public, estimates suggest, he could make upwards of $4 billion.)

On October 22, 2008, Mason launched his first Groupon offer: a two-for-one pizza deal at a bar below what is now Groupon headquarters. Twenty-four Chicagoans bought it.

Not long after, Groupon featured a one-hour experience in a sensory-deprivation chamber at half off. Ninety-seven people bought it, about 5 percent of Groupon’s mailing list at the time. “That’s when we realized people were thirsting for something like this,” Mason says. As the U.S. economy became mired in recession, deals were suddenly “recession chic.” After six months Mason decided to expand the business to Boston, and soon after that to New York and Washington, D.C.

At a board meeting in 2009, one of Groupon’s board members asked Mason to consider picking up the expansion pace. “He said, ‘What would you have to do to launch four cities a month?’ I was like, ‘Oh my God, that’s crazy.’ ” But, Mason says, “before I knew it we were launching 15 cities a month just in the United States.”

Much of the expansion process happened remotely: Chicago-based salespeople researched the business landscape in each city that Groupon planned to colonize, drumming up business with merchants by phone, then establishing local offices shortly before the launch.

For a while, Mason couldn’t keep up. “We had backlogs of 9 to 12 months long of businesses that wanted to be featured,” he says. He compared himself to being the only plumber in the city of Chicago.

The service vacuum that resulted gave rise to a legion of competitors, which copied Groupon’s Web site and began hawking their own local deals. There was Zoupon, You Swoop, Groop Swoop, Groupocity—you name it.

“It was the most surreal, stomach-turning experience to see these people ripping us off,” Mason says.

In February of 2010, Mason decided he had had enough. He sued Groupocity, one of the copycat companies, for trademark infringement. The company changed its name to CrowdSavings.com, and Groupon dropped the lawsuit. But a month later, Mason was on the receiving end of a legal complaint. A law firm filed a class-action suit against Groupon for allegedly imposing illegal expiration dates on its vouchers. That lawsuit was settled out of court (the terms were kept confidential), but more followed.

The legal cases took a toll on the usually laid-back Mason.

“I don’t get stressed out,” he says. “But there have been two or three things that have happened that gave me stress. One of the first times was when we got hit with a class-action lawsuit,” he says. “I took it really personally.”

‘People want to pitch him as this goofy boy wonder, or this happy-go-lucky youngster who’s playfully running this company,” says Aaron With, Mason’s friend, and now editor in chief at Groupon. “But he’s a deeply disciplined, highly organized, extremely critical, driven, driven person. He’ll hold everyone accountable to the highest standard. And he can usually do your job better than you can. He’s extremely well rounded and he knows every aspect of the business.”

A couple of years ago, With recalls, he went to the grocery store with Mason to buy supplies for a cookout. Mason was in a big hurry. “I wasn’t shopping fast enough for him, so he grabbed the list out of my hand and started shopping really, really fast.”

Mason raced to the checkout line and insisted on bagging the groceries himself to get the job done faster. But the bagging job was sloppy. “He put the produce at the bottom and the cans on the top,” With says.

After they left the store, the bag burst and a jar of mayonnaise shattered on top of the rest of the groceries. “Andrew’s always getting shards of glass and mayonnaise all over my onions,” With says. “But he’s always getting me out of the store faster. . . . He’s just an impatient person.”

In April of 2010, Groupon received a $135 million cash infusion from investors, including Russian Internet billionaire Yuri Milner and several prominent Silicon Valley firms. After that its growth was like a tidal wave.

On April 19, 2010, Groupon expanded into Canada, its first foreign country. The next month, Mason purchased a European daily-deals site called Citydeal, which had positioned itself as the main European Groupon clone. Overnight, Groupon went from being in 2 countries to being in 18.

“Not bad for 19 months’ work!” Mason blogged at the time.

Mason and his team began snapping up Groupon’s copycat competitors like candy. In June they entered Chile and Brazil. In August they expanded to Russia and Japan. Then Singapore, South Africa, India, the United Arab Emirates, and China. Today, Groupon is in 46 countries and more than 500 cities.

“We wanted to really own this market,” says Rob Solomon, Groupon’s president and chief operating officer. “We figured the best thing to do was grow our business very aggressively. We wanted to not just be the 800-pound gorilla but the 8,000-pound gorilla.”

Groupon’s strategy, like the game of Risk, was world domination. Early on “we chose speed over integration,” Mason says.

In spite of this, Groupon wasn’t always first to the market. Some of the clones began registering Groupon trademark rights or local domain names in other countries before Mason and his team got around to it. In some cases Groupon was able to buy those rights—paying anywhere from a few hundred dollars to tens of thousands of dollars. But as Groupon grew in popularity, many clones decided not to sell out. In some critical markets, Mason found himself engaging in hostage negotiations to use the Groupon name.

In Australia a daily-deals company called Scoopon filed for the Groupon trademark and also purchased the Australian Groupon domain name. Mason offered the owner of the company nearly $300,000 for the site and the trademark. Scoopon balked, and Groupon sued. With no other choice, and not wanting to lose the Australia market altogether, Mason decided to launch in Australia under a different name entirely, Stardeals—while Groupon.com.au remained tied up and inactive under unrelated ownership. (The lawsuit is still pending.) Similar scenarios began playing out all over the map.

Groupon is still working to secure the Chinese version of Groupon.com, currently operating in China under the name GaoPeng. A retired government worker in Bangalore bought the Indian Groupon Web domain and is running a business that looks nearly identical to the U.S. Groupon. In Ireland, Groupon successfully brought charges before the World Intellectual Property Organization to force a subsidiary of the Irish Times Group to give up the Irish version of the Groupon domain name.

Domain squatting is a common pitfall of the Internet world, but it can be especially problematic with a digital business that is easily replicable.

“Groupon isn’t a bricks-and-mortar business. It’s clicks rather than bricks,” says James O’Rourke, a professor of management at the University of Notre Dame. “As a result, they’re heavily dependent on owning the domain name and having local familiarity with their brand. If it’s not capital-intensive, if the barriers to entry are low, and if you don’t have proprietary technology, then anybody can get in the business. It’s not like you’re building airplanes.”

Among the companies now offering competing Groupon-like services are Facebook, Google, AT&T, and The New York Times.

Groupon is still the undisputed leader in the daily-deals business, but as more competitors jump in, it will be harder to thrive.

“Yes, they are making gobs of money, but things are getting tougher every day,” says a former Groupon employee.

A person familiar with the company says that Groupon’s margins are already being pressured as businesses become savvier at the negotiating table. Instead of making a solid 50 percent on the deals, many of Groupon’s salespeople are being told to accept less favorable margins, in the 35-to-45-percent range. National merchants are now able to negotiate deals in which Groupon’s share is 5 to 25 percent. (A spokesperson for Groupon says the margins on local deals “can be slightly lower or slightly higher than 50 percent” and declined to disclose its cut of the national deals.)

“They’re pushing, pushing, pushing as hard as they can,” says Sucharita Mulpuru, an e-commerce analyst at Forrester Research. “The margins are only going down. They’ve already hit up everybody who is the lowest-hanging fruit from a merchant standpoint. The next tier will require a much tougher sell.”

Mason talks a lot about his constant “paranoia that we’re doing everything wrong. . . . I never let it subside.” But he says he’s not as bothered by Groupon’s competitors as he used to be: “The only time that companies lose to competitors is when they become fixated on those competitors and reactive to competitors. Then they start doing things that are designed for the purpose of crushing competition instead of things that are designed to make their customers happy.”

But earlier this year, an e-mail that Mason wrote to his employees was leaked to The Wall Street Journal, suggesting a less Zen stance toward his competition. In what has become known as the Frodo memo, Mason wrote, “Not only must we continue to beat the thousands of clones who lifted our idea and began at roughly the same time as we did, but now we must also beat the biggest, smartest technology companies in the world. They are coming HARD. If you feel a little like Frodo climbing Mount Doom, you can’t be blamed.”

He closed the e-mail on a cautionary note: “By this time next year, we will either be on our way to becoming one of the great technology brands that define our generation, or a cool idea by people who were out executed and out innovated by others that were smarter and harder working.”

In November of 2010, Google made a $6 billion acquisition offer for Groupon. At the time, the amount that Google offered struck many as outrageous. A company less than three years old—with competitors coming at it from every direction—being offered billions? It seemed like a no-brainer that Mason would jump at the chance to sell out at that sum. But he didn’t.

When I asked Mason about the Google decision, before the I.P.O. filing had been announced, he grinned. “We’re really happy we’re an independent company. If you look at what’s happened to us in the last three to six months, hopefully to some degree it explains our enthusiasm.”

Groupon’s S.E.C. filings gave the first detailed look at just how meteoric Groupon’s growth has been. Last year its annual revenue reached $713 million, up from $30.5 million the year before—a 2,241 percent increase. Revenues are on track to be higher still this year. The number of Groupon subscribers increased to 83 million in the first quarter of 2011, up from 1.8 million at the end of 2009.

But the public filings also point to the shadow cast by Groupon’s stunning rise: its massive losses. As Groupon mushroomed around the globe, its operating costs surged. Last year Groupon’s annual net loss hit $389.6 million, compared with a net loss of $1.5 million in 2008, according to the filings.

Mason and other Groupon execs have said that the aggressive growth was necessary to stake and maintain a lead. Groupon spent more than $200 million on marketing alone in the first quarter of this year. Its I.P.O. filings acknowledge that the company could be outspent by some tech behemoths, including Google and Facebook, which have both recently launched Groupon-type services. The filings also state that Groupon can’t guarantee the same rate of growth moving forward: “Given the limited history, it is difficult to predict whether this market will continue to grow or whether it can be maintained.”

In a letter to potential shareholders, Mason vowed that his trademark persona is here to stay. “We are unusual and we like it that way,” he wrote. “We want the time people spend with Groupon to be memorable. Life is too short to be a boring company.”

But the pretense that Groupon is a scrappy start-up is wearing thin. Mason takes great pains to emphasize that the company is staying true to its idiosyncratic roots, but it’s hard to maintain that a publicly traded multi-national business being valued at $20 billion will remain a quirky outsider.

Rob Solomon recently announced his departure from the company. He and Mason have a good relationship by all accounts, but Solomon prefers the bustle of a start-up atmosphere—something that Groupon no longer has.

“A year from now I’m not the guy who should be running [Groupon],” Solomon says. “I like the start-up, hypergrowth, Wild West growth phase. I love big-picture strategy stuff. I don’t love the nuts-and-bolts operator role.”

Those who know Mason best worry that a public company won’t suit him either. “It will no longer be Andrew’s company,” says Steve Albini. “It will be a company Andrew is running with a whole bunch of legal and fiduciary obligations. Seeing that happen to something that was very close to me would bother me.”

On a recent afternoon Mason stood in front of a whiteboard, marker in hand, at his offices in Palo Alto. He started drawing a wide upward curve. “This is the S-curve for Groupon 1.0 as it exists today,” he said. He stopped for a moment and then began drawing another line, this one sloping upward to the edge of the board in a steady progression. “This one goes on like this. Forever, strangely.”

This is Mason’s baby. It’s called Groupon Now.

“We want to change the way that people buy and discover from local businesses in the same way that Amazon has changed the way that people buy products,” Mason explained.

Groupon Now—which launched in Chicago in May, and has already expanded to several other cities—is an app that allows customers to access real-time deals on their mobile devices based on their location and previous buying trends. They can hit one of a few buttons, like “Eat Something” or “Have Fun.” Groupon Now will recommend nearby restaurants or entertainment venues running offers at that time.

“We’re giving customers access to more relevant deals that they can use on the fly, at the moment impulse strikes them.”

For merchants, the service is designed to act as an inventory-management system, allowing them to offer deals to fill up empty seats during slow periods or use up inventory toward the end of a night. Groupon doesn’t take as large a cut of these deals, and merchants retain more control over the timing and substance of the deals. Mason calls it “the holy grail for merchants.”

Bill Jacobs, the owner of Piece Pizzeria and Brewery, a popular Chicago restaurant, had always rebuffed Groupon salespeople. “We would never do the regular Groupon,” Jacobs says. “It’s such a busy place we’d basically be shooting ourselves in the foot.” But with the launch of Groupon Now, he decided to try the service to fill seats during slow times. Now Piece can configure its own deals and respond more immediately to sluggish periods. If business slackens on a Tuesday at two P.M., Jacobs can log on to his Groupon Now account and post a deal instantaneously, offering, say, 30 percent off pizza until 5:30. Customers in the area have access to the deal within seconds through the Groupon Now app on their smartphones and can redeem the offer, which typically expires within hours. Jacobs keeps around 75 percent of the revenue.

From here, Mason says, he sees Groupon expanding into every sphere of local commerce, from analyzing customer behavior and offering customer reviews to scheduling reservations.

Groupon Now could also go a long way in caulking Groupon’s chinks. It will help keep merchants flowing through Groupon’s pipeline and, by creating a more proprietary technology-based service, will make Groupon harder to replicate. Mason says that Groupon Now will help transform Groupon from a sales company into more of a technology company.

Marc Andreessen, a co-founder of Netscape and an investor in Groupon, thinks that Groupon Now will help the company become a “permanent part of how small businesses acquire new customers It’s comparable to the Yellow Pages in the old days—fundamentally you had to use it. It’s going to be a core.”

In his late teens and 20s, Mason had always fancied himself part of the counterculture tribe. He hitchhiked across New Zealand, milking cows, harvesting honey, and building shacks. He followed around the punk-rock band Fugazi the way others followed the Grateful Dead. He took on Colonel Sanders. Now he’s heading a multi-national corporation based on consumerism.

“It’s totally weird, and I’m self-deprecating about it,” he says. “I feel like I’ve made the transition from Anakin to Darth Vader.”

Mason has been visibly stressed in recent months. He’s abandoned his usual vegetarianism and gained weight.

“In a lot of ways with technology the good you do ends up being a side effect of something that’s fundamentally selfish,” he says. “I mean, we’re catalyzing new life passions for people every day. Like, that’s awesome. That’s really exciting to be a part of and I can totally sink my teeth into that. Maybe I’m just rationalizing my massive sellout, but I don’t think so.”

Mason is a notoriously obsessive worker. He arrives at the office at seven in the morning and typically doesn’t leave until around seven or eight in the evening. He says he frequently falls asleep at his computer and dreams about work. He insists he has no free time, other than the scarce moments he spends with his fiancée, Jenny Gillespie, a musician whom he’s marrying this fall. (Mason played accordion on her album Light Year.)

“Working this hard, it’s not a chore,” Mason says. “It’s an absolute joy. Why would you not want to spend your life spending every waking hour working on something where you can have such an impact and that’s so interesting? I mean, what’s better? Maybe playing video games, but short of that there’s no activity other than work that could possibly be more satisfying.

“The irony is that in theory I’m at a place now where I’d probably be able to enjoy life more than I ever will in the future or have in the past, but I don’t have time to take advantage of any of it.”

Mason’s one big, extravagant purchase since becoming wealthy? A Steinway grand piano. “I went to the factory to pick it out and everything,” he says.

He says he has found deep meaning in studying Bach’s final masterpiece, The Art of Fugue. “He actually died writing it,” he told me. “And nobody cared about him anymore. He just worked on these fugues because he believed in it and he loved it and that’s all that mattered and fuck the rest of the world.”

He paused for a moment. “I love the idea of dying doing something that nobody cares about. I think that’s a cool idea.”